Tech giant VMware secures acquisition of virtual network start-up Nicira for a hefty $1.3 billion price tag.
In a significant move, VMware has agreed to acquire Nicira, a 100-employee network virtualization start-up, for $1.3 billion. This acquisition marks a significant expansion for VMware, doubling its market opportunity, according to Marc Andreessen.
Nicira's technology is based on the doctoral work of CTO and co-founder Martin Casado, who conducted his research at Stanford University. The technology is used by companies like eBay and Rackspace to manage physical network infrastructure as virtual or software-defined networks.
The acquisition allows VMware to leverage Nicira's technology for automatic network capacity provisioning and cloud-like scaling of network infrastructure. This technology offers operational flexibility similar to server virtualization, treating the physical network as a resource pool of capacity that can be consumed and repurposed on demand.
One of the key benefits of this virtualized network is the potential cost savings. Nicira claims that large data center customers can save $15 to $30 million per data center in server and network infrastructure costs. This savings is achieved by reducing the number of network ports required.
OpenFlow, an open source software-defined networking protocol, forms the basis of Nicira's products. The protocol was developed by Nick McKeown (a Brit), Scott Schenker, and Casado. All the major networking equipment manufacturers, including Cisco, Juniper, and Brocade, have announced their intention to support OpenFlow.
The acquisition positions VMware as the 'industry leader in software-defined networking'. The move has also sparked discussions about the potential disruption of Cisco's near-monopoly of the IP switching market, with Brocade CEO Michael Klayko stating that OpenFlow and software-defined networking have the potential to do just that.
Casado's PhD thesis focuses on architectural support for security management in enterprise networks. This focus on security is likely to be a key selling point for companies looking to adopt software-defined networking technologies.
In conclusion, the acquisition of Nicira by VMware is a significant move in the software-defined networking market. The potential cost savings, operational flexibility, and security benefits offered by Nicira's technology make it an attractive proposition for businesses looking to modernize their network infrastructure.
